FinMin mulling IPOs in 3 state-owned firms in FY16

The Finance Ministry is trying to revive plans for initial public offerings in three Central Public Sector Enterprises (CPSEs), namely Hindustan Aeronautics, Rashtriya Ispat Nigam Ltd and THDC India Ltd, as it aims to achieve a budgeted disinvestment target of Rs 69,500 crore for 2015-16.

A proposed 10 per cent IPO in HAL has been discussed for the past two years, and RINL and THDC public debuts, each 10 per cent, were considered last fiscal as well. None of these plans saw a resolution for a number of reasons. Now, officials from the department of disinvestment (DoD) in the Finance Ministry are setting the ball rolling again on the three proposals, Business Standard has learnt.

The total proceed from the three offerings is expected to be around Rs 6,000 crore. Half of that will likely be garnered by HAL, with RINL expected to rake in Rs 1,500 crore and THDC Rs 500 crore.

“The DoD has already prepared a pipeline of minority stake sales worth Rs 30,000 crore (of listed PSUs), in various stages of approval, before the year has even started. That gives it some time to put IPOs back on the table,” a senior government official said. However, there are some stumbling blocks right now, the person added.

Sources say that the IPO of HAL, a defence behemoth and India’s only manufacturer of Military Aircraft, is on the backburner as the Defence Ministry is not keen on selling stake in one of its marquee organizations.

Officials from disinvestment department will likely meet their counterparts from South Block soon to hear their concerns and pushing for the need to take the company public, the official said, adding that the date for such a meeting had not yet been decided.

Similarly, sources said that there was unwillingness on the part of the Uttar Pradesh government to take THDC public. The hydro-electric power company, formerly known as Tehri Hydro Development Corporation, is jointly promoted by the Centre and the UP government. They added that DoD is planning to meet officials from UP’s Finance Department to discuss the issue. Further details were not revealed.

As for RINL, the Vizag-based steelmaker suffered damages as Cyclone Hudhud hit the country’s east coast in October last year. The Parliament was informed that the company had incurred damages worth about Rs 350 crore. Government officials later said that the proposed IPO would be deferred till the company could recover. Here too, Officials will soon start discussions with representatives from RINL to come up with a feasibility plan and roadmap for a market debut.